You seem to be a small business owner who has a "good thing" (in your view) going with the present tax system and oppose any change - despite your nonsense statements to the contrary from time to time. It's clear you're one of the SQL crowd since you're really defending the Status Quo.
Your letter to Linder/Boortz or Boortz/Linder or Linder or Boortz is merely a vanity ploy in your eyes and makes very little sense. It's certainly a good thing you're a single, small businessman since you'd quickly trash one of any size.
And you - or your compatriots Nightie, s-test, etc. do not understand the mechanism of cascading tax costs and are more than willing to go around misstating facts relating the both that and the FairTax in general. It's called the Chicken Little approach to try to scare unsuspecting people who are unknowledgeable in tax systems by feeding them misinformation hyped mercilessly by your crowd to be something it is not - valid information.
The cascading mechanism is clearly shown with a simple example and it is not only for C-corporations as you keep proffering, but to businesses (period):
LEVEL 1 2 3 4 5 6 $1.00 $1.41 $2.00 $2.82 $3.98 $5.62 33.00% PROFIT MARGIN $0.33 $0.47 $0.66 $0.93 $1.31 $1.86 25.00% TAX COSTS $0.08 $0.12 $0.16 $0.23 $0.33 $0.46 SELL PRICE $1.41 $2.00 $2.82 $3.98 $5.62 $7.94 Accumulated tax costs $0.08 $0.20 $0.36 $0.60 $0.92 $1.39 Tax costs as % of 5.84% 9.98% 12.90% 14.98% 16.44% 17.48% sell price
The fact that you pay taxes from your business as personal income taxes on a 1040 does not matter; those taxes still figure in to your business and the cascading still applies. You can dredge up all the figures you wish about what your "business" does and does not pay and any expenses it does or does not have - after all who can argue since it is, after all, your solely-operated business. It would take the IRS to break it apart and see what all "inconsistencies" there might be. That certainly means nothing in the big scheme of things as I think most people would realize.
Pretending, as the Squirrel squad does, that only Subchapter C corporations pay taxes that "count" for economic purposes with he FairTax is utter nonsense and graphically illustrates your shortcomings in economic understanding.
More than that your are overwhelmed by your own selfish (and incorrect) interests in the effects of the FairTax on your busines as well as in the benefits it offers the economy (and taxpayers) as a whole. Even this vanity post of yours illustrates your narcissistic attitude - you think it's all about YOU!!! Got news for you, pal - it's not about you at all, but about our country and how to best help it economically (your thrashings and railings notwithstanding).
A lot of people (including you) do not understand that cascaded tax costs are a real thing and affect prices right now in everything one might buy (and there is no option of not paying the tax when you purchase). That's why those with existing savings accounts will be hit with the additional equivalent of a tax in the form of embedded tax costs that run something like 20-25% of the price of everything they buy and will be no worse off under thr FairTax. YOU may not wish to admit this (or your Squirrel buddies) - in fact, you can't - but most economists certainly are aware of the mechanism. You can argue about whether it's 10, 20, or 50% ... but it's there and boosts prices right across the board.
So you might as well stop your Chicken Little economics since you're obviously not well equipped for that academically.
You keep posting the same sorry discredited garbage as though it were the gospel and never address the root problem, that it is obviously illogical to expect the FairTax plan to miraculously boost everyone's purchasing power by 25%+ .
The fact that you continue to say that employees will keep all of their paychecks including the taxes that are currently withheld and that prices will also stay the same is so clearly impossible to justify that it is no wonder that you wave your arms and rant and rave and get personal about this, and trot our your tired pseudo-arguments.
Of course it is not about ME, it is about millions of people like me, and those that work for us that are being sold an illogical bill of goods by your FairTax crowd. Some of them understand that there is an inconsistency and are dishonest, others are just too enamored to even think that there might be a double counting going on, and others are just not informed enough to have a real opinion.
It is difficult to tell whether ignorance, dishonesty or fanaticism are at play with some of you.
Why don't you respond with your answers to the exact points I raise in my letter rather than trotting out your irrelevant canards?
Certainly your spreadsheet shows "embedded" taxes of 17+%.
And it shows "embedded" net profits of nearly 70%. LOL!!!
That's because, after your initial input of $1, all the rest of your inputs have been either profits or taxes. ROTFLMAO!!!
In Level 6, you show a business entity that has a total pre-tax profit margin of 29%, but no costs other than the cost of the initial input to that level. LOL!!! Of COURSE you're going to cascade such ridiculous amounts of tax.
What else do you expect?
Why don't you create a spreadsheet that shows the actual profit and taxes of real businesses? Like manufacturers:
General Electric: ~ 2% of revenues in federal corporate income taxes
Dell: ~ 2% of revenues in federal corporate income taxes
Boeing: ~ 0.3% of revenues in ALL (federal AND state) corporate income taxes
Lockheed Martin: ~ 1% of revenues in federal corporate income taxes
Whirlpool: ~ 1.5% of revenues in ALL (federal AND state) corporate income taxes
TechData: ~ 0.2% of revenues in federal corporate income taxes
Ingram Micro: ~ 0.17% of revenues in ALL (federal AND state) income taxes
Wal-Mart: ~ 1.6% of revenues in federal corporate income taxes
Sears: Less than 0.5% of revenues in ALL (federal AND state) corporate income taxts
Target: ~ 1.8% of revenues in federal corporate income taxes
Or the corner appliance store: 0% (because it's a proprietorship or a Subchapter S corporation, an LLC or a partnership).
Sprinkle some of those tax rates, which go from 0% to about 2% of revenues, into your spreadsheet, and watch what happens to the accumulated "embedded" taxes.
Also, in the REAL world, pigdog, companies ADD VALUE to their inputs before selling them to others. Even Wal-Mart's cost of goods sold is 76%, meaning that the other 24% of the selling price is the value that Wal-Mart's adds to the product when selling it to the consumer. That isn't all profit, pigdog. In fact, a relatively small part of it is profit. Most of it is the "cost of doing business."
Wal-Mart's actual pre-tax profits are about 5.6% of their revenues.
In the REAL world, companies don't enjoy 29% net pre-tax profit margins, all without adding any value whatsoever.
Now, as to the taxes paid by folks like me, who own small businesses that are not incorporated as Chapter C corporations. Here's the amount we pay in federal corporate income taxes: $0. As a percentage of revenues, that's 0%.
I get 100% of the income of my business to me.
I file a business tax return, just like a C corporation (though I think I use a different form). But whereas the C corporation pays corporate income taxes on profits, I pay $0. Again, as a percentage of revenue, that's 0%.
Then, I file my 1040, and report my personal income, on which I pay personal income taxes on my income.
Only one level of taxation, the personal level.
When the proponents of the NSRT are talking about doing away with the corporate income tax, that's because they're acknowledging that corporate income is taxed TWICE. Once at the corporate level, at a top marginal rate of 35%, and then a second time, as personal income, when it is paid to the shareholders as dividends, currently at a top rate of 15%.
But I don't pay any corporate income taxes, thus, I have none embedded in the cost of my services.
You can assert "that's different" all day long, but you've offered no coherent, consistent, or even minimally-logical argument as evidence why my personal income taxes are any different than one of my employee's personal income taxes.
We're both gonna need them to pay that hefty 30% national sales tax.
Nice job, PD. One can always quibble about the assumptions, but your example clearly illustrates how tax costs get passed up the supply chain. I would hope that those SQLs who refuse to acknowledge the validity of the concept of tax costs cascading can finally concede that point. We can debate the magnitude of the costs which get passed up, but it seems to me that denying the existence of the principle is plain stubbornness.
As you point out, the numbers are for corporate income taxes only and they don't include payroll taxes and compliance costs.
They also don't include state taxes, which will harmonize with the FairTax in most cases, creating even more savings for US producers.